No. 19-50638 IN THE UNITED STATES COURT OF APPEALS …...Jun 03, 2020 · Case No. 7:16-cv-00376, Hon. Robert Junell REPLY BRIEF FOR PLAINTIFFS-APPELLANTS RUBEN MOLINA-ARANDA, ET

Case: 19-50638 Document: 00515440373 Page: 1 Date Filed: 06/03/2020

No. 19-50638

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

RUBEN MOLINA-ARANDA; JOSE EDUARDO MARTINEZ-VELA; JUAN GERARDO LOPEZ-QUESADA,

Plaintiffs-Appellants v.

BLACK MAGIC ENTERPRISES, L.L.C., doing business as JMPAL TRUCKING; CARMEN RAMIREZ; JESSIE RAMIREZ, III,

Defendants-Appellees

On Appeal from a Final Judgment of the United States District Court for the Western District of Texas

Case No. 7:16-cv-00376, Hon. Robert Junell

REPLY BRIEF FOR PLAINTIFFS-APPELLANTS RUBEN MOLINA-ARANDA, ET AL.

Lakshmi Ramakrishnan TEXAS RIOGRANDE

LEGAL AID, INC. 301 South Texas Avenue Mercedes, TX 78570

Christopher Benoit TEXAS RIOGRANDE

LEGAL AID, INC. 1331 Texas Avenue El Paso, TX 79901

Bradley Girard Brian Wolfman GEORGETOWN LAW APPELLATE

COURTS IMMERSION CLINIC 600 New Jersey Ave., NW, Suite 312 Washington, DC 20001 (202) 661-6741 [email protected]

Douglas L. Stevick TEXAS RIOGRANDE

LEGAL AID, INC. 5439 Lindenwood Avenue St. Louis, MO 63109

Counsel for Plaintiffs-Appellants

June 3, 2020

mailto:[email protected]


No. 19-50638

RUBEN MOLINA-ARANDA, et al.,

Plaintiffs-Appellants

v.

BLACK MAGIC ENTERPRISES, L.L.C., d/b/a JMPAL TRUCKING, et al.,


CERTIFICATE OF INTERESTED PERSONS

The undersigned counsel of record certifies that the following listed persons and

entities as described in the fourth sentence of Rule 28.2.1 have an interest in the

outcome of this case. These representations are made in order that the judges of this

court may evaluate possible disqualification or recusal.

Plaintiffs-Appellants

Ruben Molina-Aranda

Jose Eduardo Martinez-Vela

Juan Gerardo Lopez-Quesada


Black Magic Enterprises, L.L.C., d/b/a JMPAL Trucking

Carmen Ramirez

Jessie Ramirez III

Georgetown Law Appellate Courts Immersion Clinic

Brian Wolfman

Bradley Girard

Daniel D. Duhaime

i


Victoria Finkle

Alexandra C. Keck

M.J. Kirsch

Texas RioGrande Legal Aid, Inc.

Lakshmi Ramakrishnan

Christopher Benoit

Douglas L. Stevick

Wright Close & Barger, LLP

Raffi Melkonian

Palter Stokley Sims PLLC

W. Craig Stokley

Nathanial L. Martinez

June 3, 2020 /s/ Brian Wolfman Brian Wolfman


ii


TABLE OF CONTENTS

Page Certificate of Interested Persons.............................................................................................. i Table of Authorities .................................................................................................................iv Introduction ...............................................................................................................................1 Argument....................................................................................................................................2 I. Plaintiffs pleaded RICO violations. ...............................................................................2

A. Plaintiffs pleaded proximate cause........................................................................2 B. Plaintiffs pleaded that the Ramirezes’ fraud was continuous. ..........................9 C. Plaintiffs pleaded claims against both Jessie Ramirez and Carmen

Ramirez. ..................................................................................................................10 II. Plaintiffs pleaded FLSA violations. .............................................................................13

A. Plaintiffs pleaded that they were covered employees under the FLSA........................................................................................................................13

B. Plaintiffs’ factual allegations were more than sufficient to make out an FLSA claim........................................................................................................14

III. If the first amended complaint was insufficient, plaintiffs should have been granted leave to amend. .......................................................................................18

Conclusion................................................................................................................................20 Certificate of Service ................................................................................................................... Certificate of Compliance ..........................................................................................................

iii


TABLE OF AUTHORITIES Page(s)

Cases

ABC Arbitrage Pls. Grp. v. Tchuruk, 291 F.3d 336 (5th Cir. 2002) ............................................................................................12

Abraham v. Singh, 480 F.3d 351 (5th Cir. 2007) ...............................................................................2, 6, 9, 10

Allstate Ins. Co. v. Plambeck, 802 F.3d 665 (5th Cir. 2015) ......................................................................................... 3, 4

Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006) .............................................................................................................8

Archie v. Grand Cent. P’ship, 997 F. Supp. 504 (S.D.N.Y. 1998) ..................................................................................14

Ashcroft v. Iqbal, 556 U.S. 662 (2009) ...........................................................................................................17

Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) ........................................................................................................ 5, 7

Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364 (11th Cir. 1997)..................................................................................10-11

Bynane v. Bank of New York Mellon, 866 F.3d 351 (5th Cir. 2017) ............................................................................................19

Dunlop v. Indus. Am. Corp., 516 F.2d 498 (5th Cir. 1975) ............................................................................................14

Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594 (5th Cir. 1981) ............................................................................................19

England v. Adm’r s of the Tulane Educ. Fund, No. CV 16-3184, 2016 WL 3902595 (E.D. La. July 19, 2016) ...................................17

Foman v. Davis, 371 U.S. 178 (1962) ...........................................................................................................20

iv


Page(s)

Garcia v. Green Leaf Lawn Maint., No. civ.a. H-11-2936, 2012 WL 5966647 (S.D. Tex. Nov. 28, 2012) .......................14

Heilman v. COSCO Shipping Logistics (N. Am.) Inc., No. cv H-19-1695, 2020 WL 1452887 (S.D. Tex. Jan. 22, 2020), report and recommendation adopted, No. 4:19-cv-1695, 2020 WL 1650824 (S.D. Tex. Mar. 24, 2020)...............................17

Hemi Grp., LLC v. City of New York, 559 U.S. 1 (2010) ............................................................................................................ 3, 7

Hoffman v. Cemex, Inc., Civ. A. No. 09–3144, 2009 WL 4825224 (S.D. Tex. Dec. 8, 2009)...........................16

Holmes v. Sec. Inv’r Prot. Corp., 503 U.S. 258 (1992) .............................................................................................................7

IAS Servs. Grp., L.L.C. v. Jim Buckley & Assocs., Inc., 900 F.3d 640 (5th Cir. 2018) ............................................................................................11

In re Enron Corp. Sec., Derivative & “ERISA” Litig., 540 F. Supp. 2d 800 (S.D. Tex. 2007) ............................................................................12

Johnson v. Heckmann Water Res., Inc., 758 F.3d 627 (5th Cir. 2014) ............................................................................................16

Jones v. Warren Unilube, Inc., No. 5:16-cv-264-DAE, 2016 WL 4586044 (W.D. Tex. Sept. 1, 2016) .....................17

Lujan v. Defs. of Wildlife, 504 U.S. 555 (1992) .............................................................................................................7

Mayeaux v. La. Health Serv. & Indent. Co., 376 F.3d 420 (5th Cir. 2004) ............................................................................................19

N. Cypress Med. Ctr. Operating Co. v. Aetna Life Ins. Co., 898 F.3d 461 (5th Cir. 2018) ..................................................................................... 18, 19

R2 Invs. LDC v. Phillips, 401 F.3d 638 (5th Cir. 2005) ..................................................................................... 11, 13

v


Page(s)

Robbins v. XTO Energy, Inc., No. 3:16-cv-793-M, 2017 WL 3215291 (N.D. Tex. July 28, 2017)............................17

Shannon v. Ham, 639 F. App’x 1001 (5th Cir. 2016) ....................................................................................4

Snow Ingredients, Inc. v. SnoWizard, Inc., 833 F.3d 512 (5th Cir. 2016) ..............................................................................................9

Sobrinio v. Med. Ctr. Visitor’s Lodge, Inc., 474 F.3d 828 (5th Cir. 2007) ............................................................................................14

St. Germain v. Howard, 556 F.3d 261 (5th Cir. 2009) ..............................................................................................9

Torres v. SGE Mgmt., LLC, 838 F.3d 629 (5th Cir. 2016) (en banc) ............................................................................4

Traub v. ECS Telecom Servs. LLC, No. 11-CA-0700, 2011 WL 5555628 (W.D. Tex. Nov. 15, 2011) .............................16

United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir. 2009) ............................................................................................12

United States ex rel. Russell v. Epic Healthcare Mgmt. Grp., 193 F.3d 304 (5th Cir. 1999) ............................................................................................12

Whitaker v. City of Houston, 963 F.2d 831 (5th Cir. 1992) ............................................................................................19

Whitlock v. That Toe Co., LLC, No. 3:14-cv-2298-L, 2015 WL 1914606 (N.D. Tex. Apr. 28, 2015) .........................17

Williams v. Henagan, 595 F.3d 610 (5th Cir. 2010) ............................................................................................14

Statutes

18 U.S.C. § 1962(c)....................................................................................................................2

18 U.S.C. § 1964(c)....................................................................................................................2

vi


Page(s)

29 U.S.C. § 206 ........................................................................................................................13

29 U.S.C. § 207 ................................................................................................................. 13, 14

Regulation and Rule

29 C.F.R. § 516.1 .....................................................................................................................18

Fed. R. Civ. P. 15(a)(1) ...........................................................................................................20

Other Authority

Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure (3d ed. Apr. 2020 update) ................................. 15, 19

vii


INTRODUCTION

Under the H-2B visa program, American employers may broaden their search to

workers outside the United States, but only after assuring the government that they

cannot find American workers to fill their positions. The program benefits employers,

giving them access to a broader labor pool. It benefits migrant workers too: They get

work opportunities, with the same basic legal protections as any other worker.

Defendants Jessie and Carmen Ramirez wanted to benefit from access to migrant

workers but did not want to uphold their end of the bargain. As plaintiffs alleged in

great detail, over more than two years, the Ramirezes repeatedly lied to the United States

to get H-2B visas and then enticed migrant workers—like plaintiffs—with the promise

of fair pay for work done. Plaintiffs left their homes, families, and communities to come

to the United States only to find on arrival that things were not as promised. Defendants

housed plaintiffs in squalid conditions, had them work 55 to 80 hours per week, and

refused to pay plaintiffs what they were owed, sometimes not paying them at all.

Plaintiffs filed this suit under RICO and the FLSA, two statutes that exist to protect

against the kind of fraud and wage abuse carried out by defendants. Plaintiffs detailed

how the Ramirezes carried out their fraudulent scheme and the myriad ways that it

harmed them. Those allegations were more than enough to make out plausible claims

under both RICO and the FLSA. As shown below, defendants’ answering brief does

nothing to undermine that conclusion.

1


ARGUMENT

I. Plaintiffs pleaded RICO violations.

As our opening brief explains (at 17-19), RICO prohibits a person from conducting

an enterprise’s affairs through a pattern of fraud. See 18 U.S.C. § 1962(c). The pattern

must include two or more related acts of fraud that pose a continued threat of criminal

activity. Abraham v. Singh, 480 F.3d 351, 355 (5th Cir. 2007). Anyone whose business or

property is directly injured by the defendants’ fraud can sue under RICO. 18 U.S.C.

§ 1964(c).

Defendants do not challenge that plaintiffs adequately alleged that (1) the Ramirezes

are “persons” under RICO who ran Black Magic, a RICO “enterprise,” see Pls.’ Br. 18-

19; (2) defendants committed multiple acts of both mail/wire and visa fraud—acts that

satisfy RICO’s definition of fraud, id. at 20-24; (3) the acts of fraud were related, id. at

24; and (4) plaintiffs suffered an injury under RICO, id. at 26-28.

Defendants contend only that (1) defendants’ alleged fraud was not the proximate

cause of plaintiffs’ injuries; (2) defendants’ alleged fraud was not “continuous”; and (3)

by alleging that defendants acted together in carrying out the fraud, plaintiffs failed to

meet Rule 9(b)’s heightened pleading standard. Each contention is wrong.

A. Plaintiffs pleaded proximate cause.

Defendants devised and carried out a scheme to lie to the federal government to get

H-2B visas, bring plaintiffs to the United States with the understanding that they would

be paid according to the information represented in the H-2B visa applications, and

then make plaintiffs do more valuable skilled labor while paying them a lower rate. The

causal relationship—between defendants’ fraud and plaintiffs’ harm—is both direct and

2


straightforward. As our opening brief shows (at 28-31), under any standard that this

Court or the Supreme Court has used to determine proximate cause, plaintiffs satisfied

it.

1. Foreseeability. The harms inflicted on plaintiffs were not only foreseeable, they

were the point of the fraud. Defendants lied to the federal government so that they

could get permission to hire guest workers to do manual labor. But when the workers

arrived, defendants made them do the more-valuable, and hence higher-paying, work

of heavy-truck driving. See, e.g., ROA.75-76, ROA.80, ROA.82, ROA.84-85. The

difference between the work that plaintiffs did and the work they were paid for (when

they were even paid at all) went into defendants’ pockets. There is “no plausible

argument” that plaintiffs were “unforeseeable victims”—their underpayment was “the

object of” the fraud. See Allstate Ins. Co. v. Plambeck, 802 F.3d 665, 676 (5th Cir. 2015).

That is enough to show proximate cause. Id.

Defendants do not disagree that the harm was foreseeable. Instead, they argue that

because Hemi Group, LLC v. City of New York, 559 U.S. 1 (2010), rejected foreseeability

as “the touchstone of RICO proximate cause,” foreseeability is simply irrelevant. Defs.’

Br. 20. That’s a mistaken understanding of Hemi. The four-justice plurality in Hemi

concluded that foreseeability could not overcome the requirement that the plaintiff’s

injury be the direct result of the defendant’s fraud. See 559 U.S. at 12. Put another way,

an indirect injury does not satisfy proximate cause, even if that injury is foreseeable. See

id. But Hemi does not forbid consideration of foreseeability in assessing proximate

cause.

3


That Hemi does not prohibit consideration of foreseeability is clear from this Court’s

post-Hemi cases, which recognize that foreseeability can help determine if an injury is

direct. See Allstate, 802 F.3d at 676; Torres v. SGE Mgmt., LLC, 838 F.3d 629, 637 (5th

Cir. 2016) (en banc). Both Allstate and Torres treat foreseeability as a way of determining

if the harm to a plaintiff “was not just incidental” but instead the “objective of the

enterprise.” Torres, 838 F.3d at 637 (quoting Allstate, 802 F.3d at 676). Put differently,

looking to the “direct and foreseeable consequence” of the fraud, Torres, 838 F.3d at

640, ensures that a plaintiff was directly injured and not “wronged by the caprice of

chance,” Allstate, 802 F.3d at 676.

Defendants agree that neither Allstate nor Torres is “in tension” with Hemi. Defs.’ Br.

21. Yet instead of addressing each decision’s treatment of foreseeability, defendants

assert that both Allstate and Torres were really only about reliance, id., that is, whether

RICO requires a victim to have actually relied on the fraud. But that’s not what this

Court said. Both Allstate and Torres rejected the defendants’ arguments that proximate

cause under RICO requires reliance, holding instead that the plaintiffs satisfied

proximate cause by showing, among other things, that they were “direct and foreseeable

victims.” Torres, 838 F.3d at 640 (emphasis added); accord Allstate, 802 F.3d at 676

(“There is no plausible argument that the [plaintiffs] were unforeseeable victims or

otherwise wronged by the caprice of chance.”) (emphasis added).

2. Direct result of a third party’s reliance. Our opening brief explains (at 30) that

plaintiffs alleged proximate cause for another, independent reason: because the lies on

which a third party (the government) relied “directly furthered the scheme that directly

injured the plaintiffs.” See Shannon v. Ham, 639 F. App’x 1001, 1004 (5th Cir. 2016)

4


(citing Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 658 (2008)). Defendants lied to

the government and swore that they would be paying plaintiffs the going rate for the

work described in defendants’ visa applications—manual labor. And they intended all

along to make plaintiffs do more-valuable work and pay them the lower rate (again,

when they decided to pay them at all). That underpayment to plaintiffs was not an

attenuated, happenstantial result of the government’s reliance, but the very purpose of

defendants’ lies.

In response, defendants acknowledge (at 17) that an H-2B fraud in which migrant

workers pay their own visa fees for the promise of work in the United States “may

create a RICO claim.” But defendants contend that plaintiffs here “paid nothing.”

Defs.’ Br. 17. That’s just wrong. Plaintiffs alleged that defendants “[c]harged plaintiffs

for visa processing fees,” among other illegal costs. ROA.84-85 (¶ 74). To be sure, these

charges are not necessary to show proximate cause under RICO. But to the extent that

defendants believe that visa charges are sufficient to show proximate cause, plaintiffs

agree (and, given plaintiffs’ allegations, they suffice to demonstrate proximate cause

here).

Defendants also appear to acknowledge that the underpayment to plaintiffs was a

direct result of their visa fraud: “Under the Complaint’s allegations, there is no scenario

where the H-2B visas would have been granted and Plaintiffs would have been paid the

prevailing wage” for the truck driving they were doing. Defs.’ Br. 18 (emphasis in

original). Despite this concession, defendants make the confounding argument that

plaintiffs were not harmed because they were actually the beneficiaries of defendants’

fraud. According to defendants, plaintiffs were fortunate to be allowed into the United

5


States on temporary work visas. Defendants ignore the harsh living and working

conditions, and then contend (at 18) that plaintiffs somehow benefitted—that is, up

until defendants’ “later decision” to underpay them.

This argument defies logic. If defendants planned to pay the going rate for heavy

trucking and to follow applicable employment laws, and only “later” decided to

underpay, Defs.’ Br. 18, why go through the added cost and headache of applying for

an H-2B visa, as opposed to hiring a ready-and-willing American worker? The

commonsense answer to that question is exactly what plaintiffs alleged: Defendants

never intended to pay the going rate.

That conclusion is buttressed by the harsh reality that, on their arrival, plaintiffs

found “that things were not as they had been promised.” See Abraham v. Singh, 480 F.3d

351, 356 (5th Cir. 2007). Defendants provided plaintiffs squalid living conditions—an

overcrowded trailer without functional plumbing—made illegal deductions from their

pay for uniforms, electricity, and laundry, and charged them exorbitant amounts for

their visas. See Pls.’ Br. 9-10. The reasonable inference from those facts is that

defendants planned on taking advantage of plaintiffs all along, not that they only later

made a decision to underpay them. And even if there were some inference from the

allegations that could support an explanation for these conditions untied to defendants’

fraudulent scheme, it could not be drawn in favor of defendants on a motion to dismiss,

when all reasonable inferences must be drawn in plaintiffs’ favor.

Defendants’ argument is also premised on a number of unsupportable assumptions.

First, defendants state that if they had not defrauded the government, plaintiffs “would

have gotten nothing.” Defs.’ Br. 4. That can only be true if accepting defendants’ offers

6


of employment came at zero opportunity cost to plaintiffs. But plaintiffs incurred the

cost of leaving their families, homes, communities, and churches, to work for ten

months in another country (a cost that defendants frame as an “opportunity,” Defs.’

Br. 11). They also lost the opportunity to find work that would have paid them the going

rate. Second, underlying defendants’ argument is the notion that, for H-2B workers,

anything is better than nothing, even if what they receive isn’t the wage that corresponds

to the work one actually does and even if that wage violates the law.

Defendants cite no support for this idea that underpayment for a migrant worker’s

labor is not an injury—indeed is a benefit—so long as they get something. That is not

surprising, given that nothing in the law supports it, and, in fact, it flouts the logic of

the H-2B program, which seeks to broaden the labor pool when employers cannot find

Americans to hire. In any event, generally it is up to Congress, not defendants, to decide

when plaintiffs are injured. See, e.g., Lujan v. Defs. of Wildlife, 504 U.S. 555, 580 (1992)

(Kennedy, J., concurring) (“Congress has the power to define injuries….”). And so it

cannot be that earning less than the wage that Congress demanded is not a harm.

3. Best situated to sue. Because the object of defendants’ fraud was to have

plaintiffs perform skilled work but pay them the lower rate for manual labor, the

underpayment is a “direct financial injury” to the plaintiffs, Bridge, 553 U.S. at 658,

making them best situated to sue defendants for their wrongdoing. Any other potential

plaintiff would have to “go beyond the first step” in the causal chain, which is

disfavored under RICO. See Hemi Grp., 559 U.S. at 10 (quoting Holmes v. Sec. Inv’r Prot.

Corp., 503 U.S. 258, 271 (1992)).

7


For the government to sue, it would first have to make the same calculation plaintiffs

would make in assessing their out-of-pocket injury—wages that plaintiffs were owed

for hours actually worked versus wages paid for those hours—and then perform the

additional complex assessment of the amount of additional taxes that would have

wound up in government coffers had lawful wages been paid.

Even more complex would be determining how damages could be shown for a

competitor or other potential H-2B applicant. Although defendants gained an unfair

advantage in the market, ROA.71-72 (¶¶ 1-2), for an injured competitor to sue, it too

would have to make the same calculation as plaintiffs—wages earned for hours worked

versus wages paid for those hours—and then show how defendants’ underpayment

affected that specific competitor’s bottom line. That is the kind of “intricate, uncertain

inquir[y]” into the competitive marketplace that the Supreme Court refused to consider

in Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 459-60 (2006). And, as defendants

highlight (at 22), other potential H-2B visa applicants might have been injured by

defendants’ scheme. But—even assuming that other visa applicants would have

standing—calculating those damages would require answering hypothetical questions

about who could have worked and for how many hours, as compared to plaintiffs here

who, as alleged in detail, were actually underpaid for the work that they actually did.

In response to plaintiffs’ showing that they are the best situated to sue, defendants

simply declare that it isn’t so. They say, without any explanation or citation to authority,

that a damages calculation would have to take into account whether plaintiffs “could

ever have been paid American-level wages.” Defs.’ Br. 23. That’s flatly wrong: Whether

plaintiffs hypothetically could have found a law-abiding employer has no bearing on the

8


actual harm defendants inflicted. After all, as the direct result of defendants’ fraud,

plaintiffs did the work demanded by defendants and then were underpaid or not paid

at all.1

B. Plaintiffs pleaded that the Ramirezes’ fraud was continuous.

Under RICO, predicate fraudulent acts must “amount to or pose a threat of

continued criminal activity.” Snow Ingredients, Inc. v. SnoWizard, Inc., 833 F.3d 512, 524

(5th Cir. 2016) (quoting St. Germain v. Howard, 556 F.3d 261, 263 (5th Cir. 2009)).

Continuity can be shown in two ways: open-ended continuity (in which the fraud

threatens to continue into the future) and closed-ended continuity (in which the fraud

already has extended over a substantial period). See Abraham, 480 F.3d at 355; Pls.’ Br.

25.

As observed in our opening brief, this Court has held that fraud in connection with

the H-2B program may constitute open-ended continuity. See Pls.’ Br. 25 (citing

Abraham, 480 F.3d at 356). Defendants ignore Abraham’s on-point discussion of open-

ended continuity in the H-2B fraud context. Instead, they argue that plaintiffs never

showed closed-ended continuity. But plaintiffs’ opening brief argued (at 25) only open-

ended continuity. On that point, defendants are silent.

1 Defendants mistake plaintiffs’ argument that their financial losses are sufficient injuries under RICO, see Pls.’ Br. 26, as an argument that a loss of a legal entitlement satisfies proximate cause, see Defs.’ Br. 21. Plaintiffs’ argument about legal entitlements was not about proximate cause, but was limited to showing the kinds of injuries that may trigger RICO liability. On that front, defendants concede that plaintiffs pleaded a RICO injury. Defs.’ Br. 22.

9


To recap: As in Abraham, plaintiffs alleged that defendants’ scheme was not based

on a single illegal transaction. See Abraham, 480 F.3d at 356; Pls.’ Br. 25. They alleged

that in addition to the visa fraud that convinced them to come to the United States in

the first place, defendants underpaid them, forced them to live in squalid conditions,

and made myriad illegal deductions from their pay. Pls.’ Br. 25; see Abraham, 480 F.3d

at 356. And after defendants were successful with their first batch of fraudulent visa

applications in 2015, see Pls.’ Br. 8, they doubled down and filed another fraudulent

application to the Department of Labor the next year, id. at 9. Their two-year scheme

thus involved more than “isolated instances of fraud,” Defs.’ Br. 27. And “there is no

reason to suppose that this systematic victimization … would not have continued

indefinitely had the plaintiffs not filed this lawsuit.” Abraham, 480 F.3d at 356; see Pls.’

Br. 25.

C. Plaintiffs pleaded claims against both Jessie Ramirez and Carmen Ramirez.

As our opening brief explained (at 19), plaintiffs alleged that, as part of operating

Black Magic, Jessie Ramirez and Carmen Ramirez together carried out a multi-year

scheme in which they repeatedly lied to the government and, on the basis of those lies,

took advantage of plaintiffs for their own gain. Defendants respond by contending that

because plaintiffs alleged that both Jessie and Carmen Ramirez carried out the fraud,

the complaint is improper “group pleading.” Br. 24-27. Not so.

Courts have rejected under Rule 9(b) guilt-by-association allegations that “provide

no basis in fact upon which the Court could conclude that any specific act of any

specific defendants is indictable for … fraud.” Brooks v. Blue Cross & Blue Shield of Fla.,

10


Inc., 116 F.3d 1364, 1381 (11th Cir. 1997).2 In those cases, plaintiffs sought to hold

multiple officers of a corporation liable for fraudulent statements made by the

corporation. See, e.g., R2 Invs. LDC v. Phillips, 401 F.3d 638, 645 (5th Cir. 2005). When

that occurs, Rule 9(b) prohibits tying all defendants to allegations that “suggest only

that some of the defendants” actively took part in the fraud. Id. That serves Rule 9(b)’s

purpose of “weeding out strike suits and fishing expeditions.” IAS Servs. Grp., L.L.C. v.

Jim Buckley & Assocs., Inc., 900 F.3d 640, 648 (5th Cir. 2018).

The kind of guilt-by-association allegations that fail to suffice under Rule 9(b) are

nothing like the allegations here. Plaintiffs alleged that both Ramirezes together

controlled every element of Black Magic’s day-to-day operations. Plaintiffs alleged that

together both Jessie and Carmen Ramirez “devised a scheme intending to defraud,”

ROA.77 (¶ 27), the government and migrant workers. They both told the government

that they were hiring manual laborers, positions that American workers were unlikely

to fill, when they actually intended to hire truck drivers, positions that Americans would

be likely to take. ROA.73-75. They both then authorized, reviewed, and submitted to

the Department of Labor visa-application forms that they swore were true but that they

knew to be false. ROA.75-76 (¶¶ 22-23), ROA.78-79 (¶ 32). Plaintiffs alleged the

specific dates of the forms, and even the Department of Labor case numbers assigned

2 The language from Brooks quoted here and in defendants brief (at 24) is from the district court’s opinion, not from the Eleventh Circuit’s opinion. The Eleventh Circuit appended the district court’s decision to its opinion and affirmed on a ground unrelated to Rule 9(b). See Brooks, 116 F.3d at 1365 (“We have no occasion to reach the remaining issues addressed in other parts of that order and imply no view concerning any of them.”).

11


to the fraudulent forms. See ROA.75-76 (¶¶ 22-23), ROA.78-79 (¶ 32). And plaintiffs

alleged that the H-2B visas were granted as a result of this multi-year scheme. ROA.78

(¶ 31). These allegations are enough to satisfy Rule 9(b)’s requirement of pleading the

“who, what, when, where, and how” of the fraud. See ABC Arbitrage Pls. Grp. v. Tchuruk,

291 F.3d 336, 350 (5th Cir. 2002).

That conclusion is underscored here because courts, including this Court, have taken

a more “relaxed” approach to the 9(b)-particularity standard when certain facts of a

case are known only to defendants, provided that the plaintiffs offer a factual basis for

their belief. In re Enron Corp. Sec., Derivative & “ERISA” Litig., 540 F. Supp. 2d 800, 806

(S.D. Tex. 2007) (citing United States ex rel. Russell v. Epic Healthcare Mgmt. Grp., 193 F.3d

304, 308 (5th Cir. 1999)). After all, “the ‘time, place, contents, and identity’ standard is

not a straitjacket for Rule 9(b).” United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180,

190 (5th Cir. 2009). Plaintiffs may not have alleged who pushed “send” on the fax

machine or who came up with the idea to defraud the government and plaintiffs in the

first place. But they pleaded more than sufficient detail to allege that both Jessie and

Carmen Ramirez are liable for the fraud.

Defendants fault plaintiffs for referring to the Ramirezes as “defendants.” But Rule

9(b) does not prohibit shorthand; it requires only that each individual defendant have

been alleged to have committed fraud him or herself. To highlight: Defendants do not

argue that the allegations fall short of Rule 9(b) as they apply to either individual

defendant. That is, defendants do not argue that if plaintiffs would have alleged that

only Jessie Ramirez (or only Carmen Ramirez) perpetrated the fraud, plaintiffs’

allegations would not satisfy Rule 9(b). That plaintiffs alleged that both defendants

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committed the fraud together thus makes no difference. In short, this is far from the

situation in which a plaintiff attempts to sue multiple defendants but alleges “only that

some”—but not each—“of the defendants” were actually a part of the fraud. See R2

Invs., 401 F.3d at 645. Plaintiffs have satisfied their burden.

II. Plaintiffs pleaded FLSA violations.

Employees covered by the FLSA are legally owed the federal minimum wage and

time-and-a-half for each hour worked over 40 in a workweek. 29 U.S.C. §§ 206, 207.

Plaintiffs showed that they are covered employees and alleged that, for their entire

employment, they were paid less than they were legally owed (and that sometimes

defendants did not pay them at all).

Defendants argue that plaintiffs (1) were not employees covered by the FLSA and

(2) made only “general allegations,” Defs.’ Br. 33, of defendants’ minimum-wage and

overtime violations. On the first point, defendants do not even address the argument

made by plaintiffs. On the second, defendants try to impose a novel (and unlawful)

heightened pleading standard and then ignore plaintiffs’ allegations that would satisfy

even that standard.

A. Plaintiffs pleaded that they were covered employees under the FLSA.

For a worker to be covered by the FLSA, the worker must show that she engaged

in interstate commerce. See 29 U.S.C. §§ 206(a), 207(a). That showing can be made in

two ways. Under “individual coverage” a worker personally “engage[s] in commerce or

in the production of goods for commerce.” 29 U.S.C. § 207(a). Under “enterprise

coverage” a worker is employed by “an enterprise engaged in commerce or in the

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production of goods for commerce.” Id. As our opening brief explained (at 33),

enterprise coverage covers “virtually every enterprise in the nation” doing $500,000 in

business. Archie v. Grand Cent. P’ship, 997 F. Supp. 504, 530 (S.D.N.Y. 1998) (Sotomayor,

J.) (citing Dunlop v. Indus. Am. Corp., 516 F.2d 498, 501-02 (5th Cir. 1975)). Plaintiffs’

opening brief (at 32-36) laid out in detail how plaintiffs’ allegations satisfy the FLSA’s

sweeping enterprise-coverage provision. And they made clear they were arguing only

enterprise coverage. See Pls.’ Br. 32.

For that reason, defendants’ arguments—which do no more than chide plaintiffs

for not addressing this Court’s decisions concerning individual coverage—are irrelevant.

See Sobrinio v. Med. Ctr. Visitor’s Lodge, Inc., 474 F.3d 828, 829 (5th Cir. 2007); Williams v.

Henagan, 595 F.3d 610, 620 (5th Cir. 2010); see also Garcia v. Green Leaf Lawn Maint., No.

civ.a. H-11-2936, 2012 WL 5966647, at *2-*3 (S.D. Tex. Nov. 28, 2012) (cited by

defendants at 31) (noting that, in Sobrinio, “the Fifth Circuit adopted a practical test for

whether an employee is personally engaged in commerce,” and that, in Williams, the

plaintiff’s lack of engagement in interstate commerce did not “bestow individual

coverage under the FLSA.”).

As to enterprise coverage—which defendants nowhere address—we rely on our

opening brief.

B. Plaintiffs’ factual allegations were more than sufficient to make out an FLSA claim.

As our opening brief explains (at 36-40), plaintiffs’ allegations are more than

sufficient to satisfy their burden at the pleading stage. Defendants ignore almost all of

plaintiffs’ detailed allegations, cherry-pick two statements from plaintiffs’ opening brief,

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and then conclude that “these general allegations are not enough” to allege a plausible

violation of the FLSA. Defs.’ Br. 33. But defendants’ summary of plaintiffs’ allegations

is just not accurate. Plaintiffs alleged the exact dates that they were employed, ROA.82

(¶¶ 51-53), that “[i]n all weeks plaintiffs were employed by defendants” they worked “in

excess of 40 hours per week,” ROA.85 (¶ 80), and that “[a]t all time relevant to this

action” defendants “failed to pay the required minimum wages and overtime

compensation due to plaintiffs,” ROA.86 (¶ 83) (emphasis added). That alone is

sufficient to put defendants on notice of the relevant date range and approximate hours

underlying plaintiffs’ claims. See Pls.’ Br. 39 (citing cases holding that no more is

necessary).

And yet plaintiffs pleaded more. For the minimum-wage violations, they pleaded,

for example, that for several pay periods in August and September 2015, they worked

50 to more-than-80 hours per week and were not “paid fully or paid at all.” ROA.86

(¶ 87); see Pls.’ Br. 37. As to overtime, plaintiffs explained that they worked overtime

every week—regularly “between 55-80 hours per week,” ROA.85 (¶ 80)—and that

defendants failed to pay plaintiffs overtime “for each hour they worked above 40 in a

workweek,” ROA.86 (¶ 82) (emphasis added). And although “[t]he complaint need not

contain denials of possible exemptions or affirmative defenses allowed by the [FLSA]”

because “that is part of the defendant’s burden of pleading,” 5 Charles Alan Wright &

Arthur R. Miller, Federal Practice and Procedure § 1239 (3d ed. Apr. 2020 update),

plaintiffs made those allegations too, see Pls.’ Br. 37-38. They alleged that defendants

made illegal deductions for uniforms, housing, utilities, unreimbursed visa fees, and

15


travel expenses. ROA.81, ROA.84-85. If that is not enough to allege a facially plausible

claim for relief, it is hard to imagine what would be.

Beyond getting the facts wrong, defendants repeat the district court’s mistake and

treat plaintiffs’ burden as a burden of proving their case, as opposed to plausibly alleging

it. The only case defendants cite from this Court is a case decided at summary judgment,

where plaintiffs must make an evidentiary showing. Defs.’ Br. 32 (citing Johnson v.

Heckmann Water Res., Inc., 758 F.3d 627, 639 (5th Cir. 2014)). They argue for a similarly

rigorous standard at the pleading stage: Defendants argue that plaintiffs “must make

some effort to quantify the amount of lost wages” and cannot “simply say so.” Defs.’

Br. 32. They then contend—without any legal support—that the way for plaintiffs to

have made this showing was to “reference[] their time sheets or some other indicia of

the amounts of overtime.” Defs.’ Br. 32. Overall, defendants demand that plaintiffs

“establish how much compensation” they are due. Defs.’ Br. 33 (emphasis added).

At the pleading stage, a plaintiff need not “establish” anything. FLSA claims, like

any others governed by Rule 8(a), must rise only to the level of plausibility. See, e.g.,

Hoffman v. Cemex, Inc., Civ. A. No. 09–3144, 2009 WL 4825224, at *3 (S.D. Tex. Dec. 8,

2009). That means that plaintiffs need not “quantify,” Defs.’ Br. 32, or “establish,”

Defs.’ Br. 33, precisely how much they are due. They must put defendants on notice of

an approximate date range and un- or undercompensated hours, which is all that notice

pleading demands. See, e.g., Traub v. ECS Telecom Servs. LLC, No. 11-CA-0700, 2011 WL

5555628, at *2 (W.D. Tex. Nov. 15, 2011) (“Though the additional information sought

by Defendants might be beneficial, it is not required to survive a motion to dismiss.”).

And although this Court has not specifically applied the (unquestionably applicable)

16


notice-pleading standard to the FLSA, “many district courts in the Fifth Circuit have

consistently found an FLSA pleading sufficient when it ‘puts defendant on notice as to

the relevant date range, as well as the approximate number of hours for which plaintiff

claims [he or she] was under-compensated ... the FLSA does not require more.’” Robbins

v. XTO Energy, Inc., No. 3:16-cv-793-M, 2017 WL 3215291, at *2 (N.D. Tex. July 28,

2017) (citing Jones v. Warren Unilube, Inc., No. 5:16-cv-264-DAE, 2016 WL 4586044, at

*2 (W.D. Tex. Sept. 1, 2016) (collecting cases)); see also Pls.’ Br. 39, 43 n.5 (collecting

cases).

The in-circuit decisions that defendants cite don’t say anything different. Plaintiffs

acknowledge the truism that a complaint must contain more than “[t]hreadbare recitals

of the elements of a cause of action.” Whitlock v. That Toe Co., LLC, No. 3:14-cv-2298-

L, 2015 WL 1914606, at *3 (N.D. Tex. Apr. 28, 2015) (quoting Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009)). And it is true that a plaintiff might “fail to put defendant on notice of

the approximate date ranges and approximate number of hours worked” when he does

not provide dates of employment, does not approximate hours, and contends that the

defendant paid “some” of the required overtime. England v. Adm’r s of the Tulane Educ.

Fund, No. CV 16-3184, 2016 WL 3902595, at *3 (E.D. La. July 19, 2016). But so long

as a plaintiff’s “allegations are not so bare-bones or bereft of factual details to support

a determination” that they were a covered employee who was underpaid, they will have

satisfied their burden at the pleading stage. See Heilman v. COSCO Shipping Logistics (N.

Am.) Inc., No. cv H-19-1695, 2020 WL 1452887, at *2 (S.D. Tex. Jan. 22, 2020), report

and recommendation adopted, No. 4:19-cv-1695, 2020 WL 1650824 (S.D. Tex. Mar. 24,

2020).

17


What’s more, to hold plaintiffs to defendants’ exacting pleading requirements would

demand that, to survive a motion to dismiss, plaintiffs would often have to rely on the

employment records that they would need discovery to get in the first place. Employers,

not employees, are required to maintain employment records. 29 C.F.R. § 516.1.

Adopting defendants’ argument is thus likely to encourage violations of federal law. If

an employee is required to produce proof before discovery, as defendants would have

it, an employer who is underpaying its employees would be better off not keeping

records at all.

III. If the first amended complaint was insufficient, plaintiffs should have been granted leave to amend.

Because plaintiffs’ first amended complaint pleaded both RICO and FLSA claims,

the Court does not need to address the district court’s refusal to grant plaintiffs’ motion

to amend. But if it does address that question, under Rule 15(a)’s “liberal pleading

presumption,” reversal is required. See N. Cypress Med. Ctr. Operating Co. v. Aetna Life Ins.

Co., 898 F.3d 461, 477 (5th Cir. 2018).

Leave to amend should be granted except in cases of “undue delay, bad faith or

dilatory motive on the part of the movant, repeated failures to cure deficiencies by

amendments previously allowed, undue prejudice to the opposing party,” or “futility of

the amendment.” N. Cypress Med. Ctr. Operating Co., 898 F.3d at 477. As our opening

brief shows (at 40-48), the district court was wrong on each of the three grounds that

it refused to grant leave to amend: undue delay, failure to take advantage of “numerous

opportunities” to replead, and futility. Defendants’ responses misstate the law and

ignore plaintiffs’ proposed complaint.

18


1. No undue delay. Defendants attempt to fashion a new standard for undue delay.

According to defendants “[d]istrict courts act within their discretion when they deny

post-dismissal motions to amend.” Defs.’ Br. 34. The upshot of defendants’ view is

that, regardless of a lack of prejudice, the district court is free to reject an amendment

simply because the request comes after dismissal.

This position reads “undue” out of “undue delay.” See Dussouy v. Gulf Coast Inv. Corp.,

660 F.2d 594, 598 (5th Cir. 1981). But “[i]n reviewing the timeliness of a motion to

amend, delay alone is insufficient: ‘The delay must be undue, i.e., it must prejudice the

nonmoving party or impose unwarranted burdens on the court.’” N. Cypress Med. Ctr.

Operating Co., 898 F.3d at 478 (quoting Mayeaux v. La. Health Serv. & Indent. Co., 376 F.3d

420, 426 (5th Cir. 2004)). As a result, “courts have not imposed any arbitrary timing

restrictions on requests for leave to amend and permission has been granted under Rule

15(a) at various stages of the litigation,” including “after a judgment has been entered.”

6 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1488 (3d

ed. Apr. 2020 update). Indeed, almost four decades ago this Court found that

“[i]nstances abound in which appellate courts on review have required that leave to

amend be granted after dismissal or entry of judgment.” Dussouy, 660 F.2d at 598.

The post-dismissal cases defendants cite do not say anything different. See Bynane v.

Bank of New York Mellon, 866 F.3d 351, 362 (5th Cir. 2017) (denying motion to amend

because of undue delay); Whitaker v. City of Houston, 963 F.2d 831, 837 (5th Cir. 1992)

(denying motion to amend because of plaintiff’s lack of due diligence). And defendants

do not attempt to show under the governing standard that the delay here was undue.

The closest they come is the assertion, without further elaboration, that “the prejudice

19


to Defendants here of reviving Plaintiffs’ claims is clear.” Defs.’ Br. 36. That single,

conclusory statement cannot be enough to meet their burden.

2. No repeated failures to cure deficiencies. Defendants contend (at 35) that

plaintiffs had “numerous opportunities” to amend their complaint, including when

defendants filed their motion to dismiss. Here too defendants misunderstand the law.

“Numerous opportunities” refers to “repeated failure to cure deficiencies by amendments

previously allowed.” Foman v. Davis, 371 U.S. 178, 182 (1962) (emphasis added). Plaintiffs

filed one amendment as of right, see Fed. R. Civ. P. 15(a)(1); there simply was no failure

to cure, repeated or otherwise.

3. No futility. Defendants assert in one sentence that the district court was right to

conclude that an amendment would be futile because plaintiffs could not “establish

proximate cause” under RICO or “plead the commerce prong of FLSA coverage.”

Defs.’ Br. 36. They do not address a single new allegation nor respond to plaintiffs’

arguments as to why their new allegations, which pointedly address the purported

deficiencies identified by the district court, preclude a finding of futility. For that reason,

on the futility issue, plaintiffs rest on their opening brief. See Pls.’ Br. 43-48.

CONCLUSION

For the reasons stated above and in our opening brief, the district court’s dismissal

of the amended complaint should be reversed. Alternatively, the district court’s denial

of leave to amend should be reversed. Either way, the case should be remanded for

further proceedings on all of plaintiffs’ federal and state-law claims.

20


Christopher Benoit TEXAS RIOGRANDE

LEGAL AID, INC. 1331 Texas Avenue El Paso, TX 79901

Douglas L. Stevick TEXAS RIOGRANDE

LEGAL AID, INC. 5439 Lindenwood Avenue St. Louis, MO 63109

Respectfully submitted,

/s/ Brian Wolfman Bradley Girard Brian Wolfman GEORGETOWN LAW APPELLATE

COURTS IMMERSION CLINIC 600 New Jersey Ave., NW, Suite 312 Washington, D.C. 20001 (202) 661-6741

Lakshmi Ramakrishnan TEXAS RIOGRANDE

LEGAL AID, INC. 301 South Texas Avenue Mercedes, TX 78570


June 3, 2020

21


CERTIFICATE OF SERVICE

I certify that, on June 5, 2020 this brief was filed using the Court’s CM/ECF system.

All attorney participants in the case are registered CM/ECF users and will be served

electronically via that system.

/s/ Brian Wolfman Brian Wolfman



CERTIFICATE OF COMPLIANCE

This brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B)

because it contains 5,747 words, excluding the parts of the brief exempted by Fed. R.

App. P. 32(f). This brief complies with the typeface requirements of Fed. R. App. P.

32(a)(5) and the type-style requirements of Fed. R. App. P. 32(a)(6) because it has been

prepared in a proportionally spaced typeface using Microsoft Word 2016 in 14-point

Garamond. /s/ Brian Wolfman Brian Wolfman


Documents

No. 19-50638 IN THE UNITED STATES COURT OF APPEALS …...Jun 03, 2020 · Case No. 7:16-cv-00376, Hon. Robert Junell REPLY BRIEF FOR PLAINTIFFS-APPELLANTS RUBEN MOLINA-ARANDA, ET